Quiz 12: Integration strategy and dynamics of competitive positioning
reaches the productivity frontier.
A firm is said to have a competitive advantage over its rivals when it:
charge a higher price than the cost leader in the industry
A successfully implemented integration strategy allows a firm to:
the intent of an integration strategy is not to be the absolute lowest-cost provider because an integrator must also increase perceived value.
An integration strategy differs from a low-cost strategy in that:
Economies of scope
BodyBlush Inc., a brand reputed for its wide variants of body wash, introduced a range of shampoos and skin moisturizers a few years ago. Since most of its products could be produced using the same resources and technology, the company's cost structure decreased, while its product portfolio widened. In this scenario, which of the following value and cost drivers is BodyBlush applying?
quality
DFS Electronics Inc. ensures that all its products are highly durable and reliable by using techniques like zero-defect and lean manufacturing systems. These efforts not only add to the products' differential appeal, but also help the company save costs during production and avoid expenses due to after-sales services. Thus, the common value and cost driver responsible for DFS Electronics' strategic position as an integrator is the _____.
Integration strategy
In the multiplex industry, Vibrant Movies Inc. is an upscale multiplex that focuses on superior customer experience. The firm charges premium prices for its movie tickets and services. Global Cine Inc., in contrast, charges the lowest price in the industry with its no-frills approach. In between these two segments is True Movies Inc., which offers a customer experience comparable to that of Vibrant Movies at a price almost as low as that of Global Cine. What strategy is True Movies pursuing in this scenario?
Mass customization
Innovate Electronics Inc. allows its customers to personalize their refrigerators in terms of the dimensions, the panels inside, and the color and design of the outer body. Also, customers can include additional features like built-in radios, extra lights, and cold water dispensers based on their individual requirements. The company successfully manufactures these tailor-made goods at a relatively low unit cost and provides it to the customers at a price almost equal to that of the standard refrigerators sold by other companies. What does this scenario best illustrate?
achieve a larger economic value created than that of rivals in the industry.
The primary goal of a firm pursuing an integration strategy should be to:
trade-off between value creation and production cost.
The productivity frontier function is concave, and it captures the:
Strategic positions are not fixed, and firms have to refine their positions over time.
The productivity frontier provides a theoretical reflection of the possible best practices at any given time. Why is this an important tool for managers?
set of best-in-class strategic positions the firm can take relating to value creation and low cost at a given point in time.
The productivity frontier represents a(n):
Innovation
Which of the following drivers simultaneously increases value while lowering cost?
Economies of scope are the savings that come from producing two or more outputs from the same resources, whereas economies of scale are decreases in per-unit cost with increases in output.
Which of the following statements accurately brings out the difference between economies of scale and economies of scope?
Choosing a strategic position requires making important trade-offs between value and cost positions.
Which of the following statements is true of a strategic position?
Mass customization
_____ is best described as the process of manufacturing a large variety of tailor-made products or services at a relatively low unit cost.
